As the Covid-19 strain of the coronavirus continues its ferocious spread around the world, we asked fund managers to highlight companies they believe will help society and the world move through this crisis, as well as those that have branched out into completely new areas to make a difference
Amid the chaos, concern and uncertainty we are facing all around us as the pandemic continues to spread and take lives, it has been heart-warming to see so many companies go out of their way to ‘do their bit’.
These company actions are so very needed – and to be applauded – in this worrying climate but they will also have lasting reputational benefits.
Andrew Parry, head of sustainable investment at Newton Investment Management, explained: “One of the things we will find out with this crisis is the companies that are getting it – those that have a clear sense of their core purpose, the enterprises that will be relevant for the future. This is a good time to shine a bright light on how companies behave.”
John Streur, president and CEO of Calvert, added: “How companies act now will impact their future brand value and profitability. There will be a lot based on how they conduct themselves through this period.”
First, Parry and Streur both pointed to companies not previously involved in the production of hand-sanitiser moving into the area in the wake of the unprecedented global demand for the anti-bacterial gels.
A few weeks ago LVMH – a business traditionally associated with the production of fashion goods, jewellery and perfumes, including the Christian Dior and Louis Vuitton brands – quickly turned its attention to hand-sanitiser, with its manufacturers producing gels within 72 hours to deliver to the French authorities free of charge.
The group said in a statement: “Through this initiative, LVMH intends to help address the risk of lack of product in France and enable a greater number of people to continue to take the right action to protect themselves from the spread of the virus.”
Streur commented: “They are taking action to do something that will immediately be helpful to society. This is a completely different effort for them, and they were already high scoring from an ESG perspective.”
Spirits/alcohol beverage manufacturers like Pernot Ricard are also providing hand-sanitiser free of charge by using alcohol in the form of ethanol for the production in order to donate large quantities to local healthcare authorities. Irish Distillers is another company doing so along with vodka distiller Absolut while, in the UK, Brewdog has agreed free distribution of sanitiser to the NHS and a number of charities including Turning Point Scotland, Aberlour and The Archie Foundation.
For the global workforce to switch almost entirely to remote working, as a result of government instructions to citizens to stay at home – and do so with very limited problems – has been a credit to the various IT companies around the world.
Again in this sector, though, there are firms that are going one step further and/or are vital in the efforts to tackle the virus.
Streur highlighted software provider Work Day, which assists businesses with HR and financial management.
“It is doing something different that is worth calling out,” he said. “They have disclosed in a regulatory filing to the SEC how they are managing risk in this crisis. Covid-19 represents an extraordinary risk to every company, but lots of groups are letting their information or actions leak out. We would hope to see other companies submit regulatory filings for transparency and disclosure reasons.”
Alessia Falsarone, head of sustainable investing at PineBridge Investments, agreed that communication is key especially in times of crisis.
“Companies haven’t been great at this – they have been failing – but investors want to hear what they are doing with their services. They don’t want to find out in the press they are closing their retail stores. They want to hear it from them – and it is the right thing to do as it is putting the employees and customers first. Without that, there is no enterprise value.”
Another example is Google, which has been “showing leadership”, according to Streur, by partnering with the US government to develop a website dedicated to reliable covid-19 education, prevention and resources.
“It is also protecting people from misinformation by removing harmful content, such as videos promoting unproven methods to prevent or cure covid-19 and fake reviews and misleading information about healthcare locations,” he added. “These types of projects require leadership to shift resources in the near term, but could accrue benefits to tech platforms that prove to be trustworthy in times of crisis.”
Meanwhile, Mastercard and Microsoft have come together to fund an effort to help find a treatment for the covid-19 pandemic – clearly something not in their traditional remit but in the wider interests of both their companies. It builds on a previous partnership where they worked together on cyber-risk.
Neil Goddin, co-manager of Kames Global Sustainable Equity Fund, identified Everbridge as another software company worth flagging. It has a monthly subscription-based business model, which is hosted in the ‘cloud’, similar to Netflix, but does something much more important.
“They save lives, and money, during and after a crisis,” Goddin explained. “Their system can send out millions of critical messages per minute, analyse live data-feeds, provide situational awareness and use multiple modalities – text, email, apps and so on – all while an emergency is ongoing.
“Unlike traditional one-way emergency communications systems, their success is leveraged on a scalable cloud-based notification engine and contact database. Everbridge are the best-in-class global player with the broadest suite of solutions and the longest list of blue-chip and government clients, including Airbus, Facebook, Florida, the Met Police, Microsoft, Oracle and Uber. The company is also seeing strong momentum around interest from companies dealing with pandemics.”
This is an obvious sector to find companies that will be assisting the world in fighting the virus, with doctors and nurses clearly being the most stretched vocations right now. We can never be thankful enough for their efforts and the risks they are taking.
From an investment perspective, Baillie Gifford’s Lee Qian, co-manager of the Positive Change fund, pointed out diagnostic companies were also playing a huge part.
“Imagine dealing with this pandemic without information available on Google, or without telemedicine provided by Teladoc, without sanitisers in industrial and institutional settings provided by Ecolab, or all of the devices that require chips provided by TSMC and made using ASML’s equipment,” he said. “Sysmex, in diagnostics, and Illumina, in gene-sequencing equipment, will be playing a role too in helping to address the undoubtable ramp-up in general treatment and diagnostics that will be required.”
Qian also highlighted Moderna for “working hard to find a vaccine” and said the share price has been strong year-to-date, though still volatile, as a result. “The company has used its cutting-edge technology and rapid response team to become the first company globally to file a potential vaccine for clinical trials – just 42 days after the RNA of the virus was sequenced. This is a process that would previously have taken many months longer. Phase 1 trials started on 16 Feb with the first human having received a trial vaccine.”
While this is undoubtedly one of the most trying times retailers have faced – particularly the smaller businesses that have now shut up shop in an attempt to prevent the spread of the coronavirus – larger firms have responded by ramping up services.
Supermarkets in the UK and across the world have been hiring more staff to replenish shelves ravaged by panicked shoppers, along with drivers to deliver much-needed supplies to quarantined vulnerable individuals. They have also put in place measures to protect staff and customers in stores, with sneeze guards at the checkouts and floor markings to ensure two-metre social-distancing rules are complied with in queues.
Streur also said companies such as Walmart and Amazon had developed “impressive mechanisms” to provide essential goods to society in this period. “Both companies have stepped up by hiring more people and doing everything they can to create safe working environments,” he added. “They are also prioritising essential goods over non-essential goods and taking action to stop price-gouging with their third-party members. In both of these cases, there is real leadership happening.”
Futhermore, major US retailers such as online prescription service CVS and pharmacy Walgreens are carrying out covid-19 testing through designated drive-thru testing sites, and also addressing the needs of healthcare professionals who are most at risk of exposure to the outbreak.
In another example of companies changing tack to help society in this crisis, Gap and Canada Goose have turned their staff’s attention to creating masks for medical staff.
While the UK government has put in place measures to provide mortgage holidays in times of personal financial uncertainty, some firms were already doing this as they recognised the need to support their customers in these difficult times.
Pinebridge’s Falsarone said: “Regional banks have been supplying mortgage relief options to borrowers and all evictions have been suspended immediately. This is a huge action and a key step for society – they acted even before the authorities told them to do so.”
The Asian Infrastructure Investment Bank (AIIB) also announced this week it was working to scale up infrastructure investment in public health, healthcare and information and communications technology to better serve members impacted by covid-19. Recent analysis by the bank found a direct correlation between quality of overall infrastructure and health security, indicating infrastructure development is a key part of health security and epidemic preparedness.
AIIB president and chair of the board, Jin Liqun, said: “There has never been a greater need for a multilateral and truly global co-ordinated effort to ease the economic burden experienced by all.
“We have a responsibility to our members, who face tremendous pressure to maintain the health and safety of their citizens while managing the impact of an economic downturn. It is our duty to be flexible and responsive in a time of crisis so our members can continue investing in sanitation, healthcare and technology-enabled infrastructure.”
In another positive move, UK income streaming provider Wagestream has waived all fees to both NHS employers and staff to allow as many key healthcare workers as possible to gain access to their pay. NHS trusts can release earnings to their staff immediately at no cost, which the firm said would help NHS employees when they really need it.
In asset management, meanwhile, firms have been stepping up donations, with the Quilter Foundation donating £100,000 to the National Emergencies Trust COVID-19 appeal launched by HRH Prince William in response to the coranavirus crisis, while Majedie is making a corporate donation equivalent to £1,000 for every member of staff.
The latter said in a statement: “With so much of the wider economy closed for business, it is important that first we support those in our own business community who normally provide us with services that are temporarily suspended. Majedie continues to pay these people, such as our office cleaners, in full. We believe this is the responsible thing to do.”
Paul Feeney, CEO of Quilter said: “We must show the best side of humanity at time like this. The virus will impact friends, family, colleagues and communities and so it’s vital that we come together and support the National Emergency Trust to ensure support gets to those people who need it, when they need it.
“With our donation by the Quilter Foundation and the support of our colleagues, I hope we can quickly support those in need.”
RWC also said it was continuing to pay employees and service providers across its offices in London, Miami and Singapore, even if they were unable to carry out their work.
CEO Dan Mannix said: “Big parts of the economy are represented by small service firms, the self-employed and those on zero-hour contracts. Financially sound businesses have a responsibility in times like this to support their broader communities and we will consider ways to deepen our commitment through this period.”
In these unprecedented times, it is refreshing to see so many businesses – and clearly there is not the space to include them all in this article – putting their employees, customers and indeed wider society above and beyond their profits and, as highlighted by Newton’s Parry and Calvert’s Steur, these companies are setting themselves up to climb higher in ESG rankings and benefit reputationally in the future.
Steur noted that the coronavirus crisis was likely to mean investors would become even more mindful of responsible investments and look to increase exposure, adding: “In the medium term, I think investors will want to have a keener approach to companies associated with environmental and health solutions.
“Everyone has a greater appreciation of how the risks to human health can have an economic impact in a big way. We will end up with a much greater appreciation of ESG – especially as we have seen how the world has rallied in response to C-19.”